EPS growth for the Mag 7 is decelerating – NDR

EPS growth is slowing for most of the “Magnificent Seven” stocks, but Tesla, according to a Ned Davis Research note.

The mega caps – (AMZN), (NVDA), (META), (GOOGL), (MSFT), (AAPL), (NASDAQ:TSLA) – are “suffering from the law of large numbers,” as “sky-high” EPS growth rates are difficult to repeat, “especially by some of the largest and most profitable companies in the world,” wrote Ed Clissold, chief U.S. strategist.

All but one of the Magnificent Seven stocks – Tesla (TSLA) – are expected to see a slowdown in their EPS growth in the third quarter, compared to the second.

Also, four of the seven stocks are expected to exceed consensus estimates of 16.8% for the S&P 500 (SP500) in the third quarter.

Clissold said that “investors questioning the premium warranted for companies with decelerating, but superior, EPS growth could play into a pullback during the seasonally weak pre-election period.”

Here are the details:

• Amazon.com Inc. (AMZN) – Actual year-over-year EPS growth in Q2: 93.9; Q3 estimate minus Q2 actual: -72.8%
• Nvidia Corp. (NVDA) – Actual year-over-year EPS growth in Q2: 151.9; Q3 estimate minus Q2 actual: -68.6%
• Meta Platforms Inc. (META) – Actual year-over-year EPS growth in Q2: 73.2; Q3 estimate minus Q2 actual: -54.7%
• Alphabet Inc. (GOOGL) – Actual year-over-year EPS growth in Q2: 31.3; Q3 estimate minus Q2 actual: -12.9%
• Microsoft Corp. (MSFT) – Actual year-over-year EPS growth in Q2: 9.7; Q3 estimate minus Q2 actual: -6.1%
• Apple Inc. (AAPL) – Actual year-over-year EPS growth in Q2: 11.1; Q3 estimate minus Q2 actual: -1.8%
• Tesla Inc. (TSLA) – Actual year-over-year EPS growth in Q2: -42.9; Q3 estimate minus Q2 actual: 35.5 (The only one without a decelerating EPS).